Uber has been sued by one of the oldest taxi companies in San Francisco.
The company named DeSoto Cab Company, which was rebranded as Flywheel Taxi after merging with the software solutions company Flywheel in 2015, has filed a lawsuit against Uber in a Federal Court on Wednesday alleging that the company is implementing "predatory pricing tactics" to blow the competition out of the water.
"Propped up by billions of dollars in venture capital, Uber has sustained substantial losses as a result of subsidizing drivers and offering transportation at prices significantly below Uber's cost," reads the lawsuit filed by Flywheel Taxi on Wednesday. "Once all competitors have been forced from the market, Uber...will be free to charge exorbitant prices for all ride-hail transportation in San Francisco."
Uber has been making big revolutions in the private transportation industry by providing very cheap rides with its "Uberpool" feature, which allow users to share their rides with other passengers going in the same direction. Uber has also cut down its UberX prices significantly.
Flywheel Taxi alleges that Uber charges more than necessary at peak times with surge prices. The lawsuit further claims that Uber has misled consumers about pricing and safety; lied to drivers about what they could earn; discriminated against passengers, among other things.
One of the key questions raised in the lawsuit is how Uber was able to afford such cheap rates for its rides. Uber has responded by stating that it takes care of the expenses with its vast chest of subsidies. Uber has received more than $12.9 billion in venture capital.